Markets to make a positive start on supportive regional cues

The Indian markets tumbled in last session on worries of impending US rate hike. Today, the start is likely to be in green taking cues from the positive start of the regional markets. Traders will also be taking some encouragement with Indian Meteorological Department’s  statement that the monsoon has made its much-awaited entry into the Andaman & Nicobar Islands, though it also said that it may get delayed a bit due to an ongoing cyclonic activity in the Bay of Bengal. Also, global rating agency Moody's Investors Service, forecasting Indian economy to grow 7.5 percent in the current and next year has said the expansion is primarily driven by rising consumption and sustained improvement in private investment was needed to maintain the momentum. However, there will be some cautiousness too with the market regulator Sebi taking its fight against black money and money laundering to another level and announcing steps to stop suspected illegal money flowing into the country by making issuers of securities known as offshore derivative instruments register their customers. Meanwhile, the Reserve Bank of India (RBI) has issued revised guidelines allowing higher foreign direct investment (FDI) limits in credit information companies (CIC) which have an established track record of running a credit information bureau. There will be lots of result reactions to keep the markets in action.

The US markets suffered sharp plunge in last session, with the major averages falling to their lowest intraday levels in about two months on renewed concerns about the outlook for interest rates. The Asian markets have made a positive start taking cues from the oil rally and weakness in dollar.

Back home, Stock markets in India capitulated by over a percent on Thursday after showing some signs of consolidation in last session. Discouraging leads from the Asian and European markets proved as a big dampener for the domestic bourses, as investors turned jittery after minutes of the U.S. Federal Reserve's latest monetary policy meeting hinted that the central bank could soon raise interest rates. The minutes of the US central bank’s April policy meeting showed that although several policymakers thought there were still risks to the economic outlook, a number of committee members believed it would be ‘appropriate’ to lift benchmark interest rates on June 15, if economic data and labour market conditions keep strengthening and inflation approaches the 2% target. Besides, a stronger US dollar weighed on commodity prices and dragged down resources stocks. On the domestic front, sentiments got undermined with the reports that Prices of many food items such as pulses, sugar, vegetables and poultry products are set to surge in India in the next three months on thin supplies, which could fuel inflation and give the central bank little room to cut rates. Depreciation in rupee value against the US dollar too weighed down sentiments. Investors failed to draw any sense of relief with global rating agency Standard and Poor’s (S&P) statement that India is likely to remain insulated from the developments in the Chinese economy provided the government carries out structural reforms to take the economy to an eight per cent growth path. On the global front, European markets opened sharply lower tracking losses in Asian markets amid concerns that the Fed may raise interest rates in the near term. Back home, the local benchmarks with a somber opening, extended the downtrend for the second straight session as pessimistic sentiments prevailed across Asian markets. Thereafter, the key indices failed to show any kind of fervor due to lack of encouraging leads. The key gauges suffered a setback in afternoon trades as sudden bouts of selling pressure emerged in the local markets immediately after a somber European market opening. Finally, the BSE Sensex ended lower by 304.89 points or 1.19% to 25399.72, while the CNX Nifty dropped 86.75 points or 1.10% to 7,783.40.